Brief
Martin Lewis condemns Ofgem’s proposed market‑stabilisation charge
Lewis says the charge would dampen competition and push higher costs onto customers switching energy suppliers.
By Felo News Desk · Published
MoneySavingExpert founder Martin Lewis has criticised a consultation launched by Ofgem on Monday that could introduce a “market stabilisation charge” for energy suppliers, a move he says would act as a “switching penalty” for consumers.
What happened
Ofgem announced a consultation on plans that would require energy firms to compensate the original supplier when a customer switches away, aiming to protect providers from losses if wholesale prices fall sharply and many customers leave. The regulator said the measure could be implemented as early as November, citing expected volatility in the winter market.
What the reports add
The Independent notes that Ofgem previously introduced a similar charge from April 2022 to March 2024 after Russia’s invasion of Ukraine caused market turmoil. The regulator stresses that reactivating the charge would not automatically create new fees for households; payments between suppliers would only occur if wholesale prices dropped sufficiently.
What was said
Lewis wrote in a blog post: “In a nutshell, it means if wholesale energy prices drop sharply, the cheap fixes and switcher deals offered will be a lot more expensive, in order to protect energy firms' profits.” He added that the charge would “dampen competition” and could push higher prices onto switchers.
Neil Kenward, interim director general of markets at Ofgem, said the consultation came as the market was expected to become more volatile this winter. “We’re preparing for what is likely to be a difficult winter for many households,” he said. “While the energy market is stronger than it was during the energy crisis, volatility remains, and the market stabilisation charge helps to protect consumers from that volatility.”
How it came about
Ofgem raised the energy price cap by four percent on 1 October, increasing the average annual bill to £1,723, as reported in earlier Felo coverage. The regulator argues that the charge would allow suppliers to continue securing energy for customers without taking unsustainable risks, thereby maintaining market stability.
Key facts
- Ofgem launched a consultation on a market stabilisation charge that could be introduced as early as November. (independent.co.uk)
- Martin Lewis described the charge as a “switching penalty” that would dampen competition. (independent.co.uk)
- The regulator says payments between suppliers would only occur if wholesale prices fall sharply enough. (independent.co.uk)
- Neil Kenward said the charge is intended to protect consumers from winter market volatility. (independent.co.uk)
- A similar charge was in place from April 2022 to March 2024 after the Ukraine war disrupted energy markets. (independent.co.uk)
Sources
- [1] independent.co.uk — originally reported as “Martin Lewis hits out at plans to introduce new energy bills ‘penalty’”
